Delta Air Lines (DAL)

But one airline’s pain always seems to be another’s opportunity. And as American Airlines (AAMRQ) grappled with bankruptcy in the last year, Delta Air Lines (DAL) has been in the middle of a big turnaround.

Delta emerged from Chapter 11 itself in 2007, and that troubled period was quickly followed by the Great Recession. DAL stock languished, simply trying to hold things together … but now it has gotten its groove back and is back above where DAL started trading post-bankruptcy in 2007.

That’s thanks to a restructuring of its pension plan, cost cutting and modest revenue growth. According to Standard & Poor’s, fiscal 2013 could see four times the profits it saw in 2010 should projections hold, and more than double the earnings of last year!

Heck, Delta even announced an ambitious dividend and buyback scheme worth more than $1 billion — something unheard of in an industry characterized by regular bankruptcies and debt restructurings. What’s not to like?

A lot, actually. Because investors should remember that all these improvements from the bottom cannot be replicated going forward. Delta posted a quarterly loss as recently as 2012, and a lot of the gains this year were part of the snap-back from the bottom.

There just isn’t a lot of organic growth in airlines … and even if there is a cyclical recovery, a lot of optimism is now priced into DAL stock. The pressures of competition and higher fuel costs could really eat into margins next year, where the company is predicted a modest 10% earnings growth and less than 4% revenue growth.

That dividend yields less than 1% — so income is hardly a reason to hang on to DAL stock. Sell now before this high-flier comes in a for a rough landing in the new year.